The High Court has upheld a ruling that former 1980s highflyer Allan Hawkins' Budget Loans and Evolution Finance misled 21 borrowers while enforcing loan contracts and sided with the Commerce Commission that 19 charges that were tossed out should be revisited.
In the Auckland District Court last year, the finance companies were found guilty of 106 charges of breaching the Fair Trading Act by misleading customers in the way they represented their rights to charge interest and costs on contracts after repossessing and selling a customer's property, while another 19 were dismissed.
In the High Court in Auckland last week, Justice Rebecca Edwards upheld a Commerce Commission appeal that those 19 charges should be reconsidered by the lower court, ruling that once an item was repossessed a lender could no longer charge interest or costs.
Budget and Evolution's appeal against the 106 guilty findings was rejected by the judge, who said "the key distinguishing feature of this case is that the enforcement of the loan contracts, and the representations made for that purpose, formed the very backbone of Budget's trade."
"Budget's business involved the recovery of monies due and owing under a loan contract," Justice Edwards said in her April 11 judgment. "Recovery was to be effected by enforcing the terms of the loan, writing to debtors demanding increased payments, and taking enforcement action under security agreements in the event of default."
The finance companies were issued with a 'stop now' notice by the regulator in November 2013 while it investigated the lenders and in 2010 Budget Loans admitted 34 charges of breaching the Fair Trading Act by charging interest and fees after it had repossessed and sold items of security. The lender agreed to make substantial repayments and was fined $30,750.
The loans largely originated from a number of failed finance companies including National Finance, Western Bay Finance and Equality Finance, which Budget Loans and Evolution Finance purchased when they were subsidiaries of former NZAX-listed company Cynotech Holdings.
Hawkins, the former head of Equiticorp, who was jailed in the 1990s for his role in the so-called H-fee scheme, took control of Cynotech in 2010 and pulled his financial support in 2013, leading to the company's liquidation and delisting.
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Investment adviser accuses ASB of giving inappropriate advice
- Evolve CEO Mark Finlay exits after $4.2m loss
- NZX, ASX technology companies equally dismal for boardroom diversity
- Change in govt blamed for investment firm pulling out of Precinct lease
- Record profit for F&P, forecasts higher again this year
Most listened to
- Adviser Brent Sheather on what he sees as ASB's inappropriate investment advice
- Craigs' Mark Lister on the Financial Stability Report and business confidence
- Mint chief executive Will Barker explains his plans for the business
- Tim Hunter decries Auckland Council's case for a new covered stadium
- NBR Radio: The best interviews – updated daily, with Grant Walker